KPIs provide key insights for small firms

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KPIs provide key insights for small firms

Small to medium-sized enterprises (SMEs) are facing a challenging business climate at present, with considerable risks present in the market - but also ample opportunity for healthy growth.

With many areas of business becoming more competitive and complex as markets diversify, it is becoming increasingly important that SMEs are doing everything they can to maximise their chances of success. In the modern world of business, the importance of key performance indicators (KPIs) in this respect cannot be overlooked.

KPIs are the critical metrics that contribute to a business' growth, and organisations can benefit hugely from identifying which factors give the most reliable indicators of their own success, and ensuring they monitor and react to this data accordingly. However, a new report from Geckoboard has suggested that many SMEs may not be taking this issue seriously enough.

According to the company's survey, 49 per cent of British SMEs have failed to identify any KPIs for their organisation; many of those that do gather this data, meanwhile, are failing to monitor it as frequently as they should, sometimes assessing trends only on a monthly basis.

Indeed, 31 per cent say the key numbers they track are never reassessed, meaning the value and accuracy of the information is likely to be compromised.

This oversight could be creating operational problems for the companies in question that may be holding back their further growth. The report noted that 39 per cent of SMEs failed to meet all of their growth targets in 2015, while 50 per cent of British staff say their overall performance is compromised when they are not made aware of key company information and metrics.

Moreover, of the 24 per cent of SMEs that say they do monitor their KPIs in real time, three-quarters hit all of their growth targets for the year - almost twice the overall average. It was shown that younger business owners between the ages of 20 and 44 are twice as likely as older business owners to monitor KPIs in real time, while those in London tend to pay more attention to this matter than those in the rest of the UK.

Overall, the findings of the report suggest that companies that do not take KPI tracking seriously are missing out on key insights and needlessly forfeiting an important competitive advantage to their more switched-on, agile rivals, thereby limiting their own growth prospects.

Paul Joyce, chief executive officer and co-founder of Geckoboard, said: "With so much data available, business leaders don't know where to start with tracking it in a meaningful way.

"Most companies aren't defining their most important metrics and even if they are, they're not monitoring them in real time. However, the data clearly shows that companies who measure and monitor their performance against goals can improve performance and grow more quickly. Sharing key metrics in real time with all employees ensures everyone is focused on working towards the same goals."